To All,
Here's Lehman's spin on the book-to-bill:
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Headline: Semiconductor Equipment: SEMI Book-to-Bill Ratio is Weakest since Oct/96
Author: Edward C. White, Jr., CFA 1(212)526-4744/Tolomy Erpf 1(212)526-5744
Company: AMAT, KLIC, KLAC, NVLS, PRIA, ETEC, SFAM, SVGI, TER, LRCX, LTXX
Country: ECO CUS
Industry: SEMICO
Today's Date : 04/17/98
* Semiconductor Equipment and Materials International, the trade association
for the semiconductor equipment industry, publishes monthly (3-month moving
average) shipment, order and book-to-bill statistics.
* The book-to-bill ratio for the 3-month average ended in March for total
equipment was 0.80, down from a revised 0.91 in February. Total shipments and
total orders were down 12.4% and 1.4%, respectively from February levels.
* The front-end ratio was 0.78 in March, down from a revised 0.86 in February.
Orders for this sector have continued to sequentially decline over the last
four reporting periods.
* The assembly & test ratio declined to 0.86 in March from a revised 1.01 in
February. Orders for this sector have continued to progressively weaken over
the last four reporting periods.
Highlights:
The semiconductor equipment market continued to weaken in March. Three-month
average orders for March declined 12.4% from February, roughly in line with
the 10.9% decline in the January to February reporting periods. This
represents the fourth month of sequential decline in orders since November,
1997. The decline in the overall book-to-bill ratio was due to weak growth in
orders in both the front end and the back end, and is the lowest reported
book-to-bill ratio since October, 1996.
Shipments also declined a modest 1.4%, representing the fourth month of
sequential declines since November, 1997. In addition to weakness in
equipment purchases by DRAM manufacturers and Asian chipmakers, U.S. based
semiconductor equipment manufacturers are now experiencing softening in orders
from U.S., Taiwanese, and non-DRAM manufacturers. While anecdotal evidence
suggests that Korean customers are beginning to make limited purchases again,
their financial constraints hamper any significant impact.
Front-end equipment orders and shipments in March declined 13.2% and 4.2%,
respectively, versus declines in orders and shipments in February of 11.9% and
10.4%, respectively. This is the sixth sequential month during which growth
in orders has been less than the growth in shipments.
Test & Assembly orders in March declined 10.6% from February levels, following
an 8.8% decline in January. Shipments in March increased 5.4%, versus a
decline of 1.4% in February. The data from the last four reporting periods
suggests that this sector is suffering not only from the fall-off in buying
subsequent to substantial capacity additions which took place in 1997, but
also from the hangover of the seasonally robust end-of-fourth quarter buying
spree.
We continue to recommend select companies in the semiconductor equipment
sector which stand to benefit from technology buying of 0.25 micron equipment
by chipmakers. The key beneficiaries of 0.25 micron technology: Applied
Materials (AMAT, $35 7/16, Rated 1); KLA-Tencor (KLAC, $38 7/8, Rated 1);
Etec Systems (ETEC, $60 1/8, Rated 1); SpeedFam (SFAM, $29 1/8, Rated 1);
PRI Automation (PRIA, $24 1/4, Rated 1).
Monthly (3-Month Average) Semiconductor Equipment Book-to-bill figures:
___Front-End Test Assembly Test & Assembly Total
May 0.92 ............ 0.75 ............. 0.52 .............. 0.87
Jun.. 0.91 ........... 0.71 ............. 0.78 .............. 0.87
lehman.com |
